This project builds on our previous work focused on the attributes of medical group practices that influence physician-directed use of resources as measured by the per member per year (PMPY) adjusted cost for enrollees in the Blue Plus managed health care program in Minnesota. Organization data on 156 clinic sites providing services for 197,734 Blue Plus enrollees have been collected and adjusted PMPY costs of care data for these enrollees for 1995 has been calculated. An analysis of these data provide new insights into the effects of group practice payment systems and physician payment systems within the medical groups on cost of care. However, the data also raise important questions about the interaction of internal group practice resource control structures and programs and physician payment systems on costs. Two major issues are apparent. First, a substantial amount of the variance in resource use across the medical group practices remain unexplained. Some unobserved factors are clearly influencing these differences in costs. Second, since our current study is limited to 1995 cost data, we are unable to identify the effects of the payment systems and group practice structural variables on costs over time. This is especially true for Blue Plus payments that withhold a portion of the fee in response to high clinic costs. The effects of this provision can not be assessed when the analysis is limited to one year's cost data. The project proposed in this application will address the issues by: (1) creating a 1997 cost data base for Blue Plus enrollees who have selected the clinics included in our organizational data set so that the effects of clinic payment withholds on costs can be assessed over time when clinical organization characteristics are controlled, and (2) conducting case studies of 10 high cost studies of 10 high cost and 10 low cost medical group practice clinics to uncover other factors influencing their practice styles and to better inform our analysis of clinic response to payment withholds. Cost data from 1997 will be assembled by Blue Cross, and the analysis of the cost data will be conducted with Blue Cross researchers. The case studies will be conducted through multiple site visits to the 20 clinics included in that part of the study.